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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________
CONSOLIDATED NATURAL GAS COMPANY : CERTIFICATE
Pittsburgh, Pennsylvania : of
: NOTIFICATION
CNG COAL COMPANY : NO. 1
CNG PRODUCING COMPANY :
CNG PIPELINE COMPANY : TRANSACTIONS
CNG RESEARCH COMPANY : DURING PERIOD
CNG STORAGE SERVICE COMPANY : _____________
CNG ENERGY SERVICES CORPORATION :
(Formerly CNG GAS SERVICES CORPORATION : July 1, 1995
CNG TRANSMISSION CORPORATION : through
CONSOLIDATED NATURAL GAS SERVICE : September 30, 1995
COMPANY, INC. :
CONSOLIDATED SYSTEM LNG COMPANY :
HOPE GAS, INC. :
THE EAST OHIO GAS COMPANY :
THE PEOPLES NATURAL GAS COMPANY :
VIRGINIA NATURAL GAS INC. :
WEST OHIO GAS COMPANY :
:
File No. 70-8619 :
:
(Public Utility Holding Company Act of 1935) :
____________________________________________ :
TO THE SECURITIES AND EXCHANGE COMMISSION:
By Order dated June 29, 1995 (HCAR No. 26321), the Securities and Exchange
Commission permitted the Application-Declaration of Consolidated Natural Gas
Company ("Consolidated") and its above-mentioned subsidiaries ("Subsidiaries")
to become effective, thereby authorizing Consolidated and its Subsidiaries to
engage in various securities transactions to finance said Subsidiary companies
through June 30, 1996.
This Certificate is filed in accordance with Rule 24, as a notification
that of the various transactions authorized by the Order, the following have
been carried out in accordance with the terms and conditions of and for the
purposes represented by the Application-Declaration and the Order:
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1. Sale of Commercial Paper.
During the period, Consolidated issued and sold commercial paper. The
maximum amount of Consolidated's commercial paper outstanding at any time
during this period ended September 30, 1995, was $157,000,000 principal amount.
Amount Outstanding - September 30, 1995 - $139,000,000
2. Borrowings under Commercial Paper Backup Lines of Credit.
There were no borrowings or repayments during this period.
3. Short-Term Advances to Subsidiaries for Gas Storage and Working Capital.
Short-term advances to Subsidiaries for gas storage and working capital
were taken through the Consolidated Natural Gas System Money Pool (SEC File No.
70-7258, HCAR No. 24128).
4. Long Term Loans.
During the period no long-term notes were issued to the subsidiaries.
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5. Sales of Capital Stock by Subsidiaries.
There were no capital stock sales during the period:
The Public Service Commission of West Virginia -- which has
jurisdiction over Hope Gas Inc. -- authorized financing for Hope by order dated
June 19, 1995. A copy of the order is attached as Exhibit A.
The "past tense" opinion required by paragraph F(2) of the instructions
as to exhibits for Form U-1 will be filed when all transactions authorized
under the Order have been consummated.
CONSOLIDATED NATURAL GAS COMPANY
CNG COAL COMPANY
CNG PRODUCING COMPANY
CNG PIPELINE COMPANY
CNG RESEARCH COMPANY
CNG STORAGE SERVICE COMPANY
CNG ENERGY SERVICES CORPORATION
CNG TRANSMISSION CORPORATION
CONSOLIDATED NATURAL GAS SERVICE
COMPANY, INC.
CONSOLIDATED SYSTEM LNG COMPANY
HOPE GAS, INC.
THE EAST OHIO GAS COMPANY
THE PEOPLES NATURAL GAS COMPANY
VIRGINIA NATURAL GAS INC.
WEST OHIO GAS COMPANY
J. M. Hostetler
Their Attorney
Dated this 31st day
of October, 1995
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PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
CHARLESTON
At a session of the PUBLIC SERVICE COMMISSION OF WEST
VIRGINIA in the City of Charleston on the 19th day of June, 1995.
CASE NO. 95-0407-G-PC
HOPE GAS, INC.
Petition for approval of
financing arrangement with
an affiliate.
COMMISSION ORDER
________________
On May 17, 1995, Hope Gas, Inc. (Hope) filed a petition for
Commission approval of an arrangement for financial services with
Consolidated Natural Gas Company (CNG), an affiliated
corporation. According to the petition, CNG has offered Hope an
arrangement to finance its July 1995-June 1996 capital
expenditures and working capital requirements. Hope will borrow
and/or receive from CNG an amount not to exceed $15,000,000 in
financing requirements, from time to time, through June 30, 1996.
Such advances may be in the form of open account advances through
the CNG System Money Pool, long-term loans and/or issuance of
common stock.
Long-term loans will be made, as called for from time to
time, by Hope's Treasurer, and will be evidenced by book entries
made pursuant to letter agreements between the parties. Long-
term loans will mature over a period of time, not to exceed
thirty (30) years to be determined by the officers of CNG, with
the interest rate predicated on, and substantially equal to, the
effective cost of money to CNG obtained from its then most recent
long-term debt financing. In Case No. 94-0481-G-PC, Hope
received Commission approval for the issuance and sale to CNG of
up to an additional 250,000 shares of common stock, contingent
upon amendment of its Articles of Incorporation. A Certificate
of Amendment to Hope's Articles of Incorporation was issued by
the Secretary of State on September 30, 1994, authorizing the
issuance of up to 1,000,000 shares of common stock. On
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December 30, 1994, Hope issued 9,000 shares of its authorized
common stock at par value ($100 per share) resulting in their
being 409,000 shares issued and outstanding. There is no written
contract between CNG and Hope for the arrangement for financial
services described above; however, the board of directors of each
of the two corporations has already, or will in the near future,
authorize the proposed transactions, subject to the consent and
approval of all governmental regulatory agencies having
jurisdiction.
Hope will pay nothing to CNG as consideration for the
financial services described in the petition. However, Hope will
pay interest on the money borrowed through the Honey Pool or
through the long-term note arrangement, and expects to pay
dividends on common stock. Hope states that the proposed
arrangement for financial services will have no adverse effect
upon Hope's gas service. The acquisition of funds by Hope under
the arrangement will make possible the construction the needed
facilities, thereby enabling Hope to maintain its current level
of gas service. Hope indicates that its 1995 plant budget calls
for the expenditure of approximately $7,814,000 on distribution
plant, $593,000 on general plant, $398,000 on production, and
$1,490,000 on transmission, totaling $10,295,000.
In addition, Hope states that the terms and conditions of
the proposed arrangement for financing services are fair and
reasonable. Funds borrowed from the Honey Pool will bear
interest equal to CNG's weighted average rate of commercial paper
and/or revolving credit borrowings. If CNG has no such borrowing
outstanding, then the interest rate shall be predicated on the
Federal Funds' effective rate of interest as quoted daily by the
Federal Reserve Bank of New York. Long-term loans from CNG will
bear interest at a rate substantially equal to the effective cost
of money to CNG obtained through its then most recent long-term
debt financing. In the event CNG issues no long-term debt during
the period covered by this petition, interest on such loans will
be tied to the Salomon Brothers, Inc. Bond Market Roundup, or a
comparable rate index, dated nearest to the time of first
takedown. Such rate will be adjusted to match CNG's cost of
borrowing should it subsequently issue long-term debt within one
year of the date of first takedown. Should CNG not issue long-
term debt during the subsequent year, the indicative rate at the
time of first takedown will be used for the life of the security.
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According to Hope, such rates of interest represent more
favorable rates than could be obtained by the individual
subsidiary companies, including Hope.
Finally, Hope states that experience during recent years
operating under financial authorizations has shown the
impossibility of predicting at this time the exact nature and
amount of external financing that actually will be necessary.
Revenues are temperature sensitive, as well as sensitive to
economic conditions. The financing arrangements described in the
petition are designed to meet fluctuating financing requirements
with a minimum of external borrowing, and to provide increased
flexibility and effectiveness in fund management. As in previous
years, only the amount of financing that is actually necessary
will be used. In closing, Hope requests that the Commission
grant its consent and approval in advance to consummate the
proposed financing arrangement and that notice and hearing
requirements be waived.
On June 16, 1995, Staff filed a memorandum recommending
approval of the financing arrangement without specifically
approving the terms and conditions. Staff also indicated that it
reserved the right to challenge any adverse impact on Hope's
capital structure resulting from the arrangement, Staff also
recommended that the Commission waive public notice and hearing.
From our review of the record, we concur with Staff that
Hope's petition to enter into the financial arrangements with CNG
should be granted. We have not examined the specific terms and
conditions of the contract and express no view on the specific
terms and conditions. We also believe it is appropriate to waive
public notice and hearing requirements.
FINDING OF FACT
_______________
On May 17, 1995, Hope Gas filed a petition for Commission
approval of an arrangement for financial services with CNG.
CONCLUSION OF LAW
_________________
The petition should be granted. However, we express no view
on the specific terms and conditions of the contract.
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ORDER
_____
IT IS, THEREFORE, ORDERED that Hope's May 17, 1995 petition
is hereby approved. We express no view on the specific terms and
conditions of the contract.
IT IS FURTHER ORDERED that the public notice and hearing
requirement is hereby waived.
IT IS FURTHER ORDERED that the Commission's Executive
Secretary serve a copy of this order upon all parties of record
by United States First Class Mail and upon Commission Staff by
hand delivery.
A True Copy, Teste:
ARC
DT/950407.WPD
Howard M. Cunningham
Executive Secretary
